You're watching...
Penn Financial CEO Matt McCall on concerns money-market funds are too risky and need further regulations.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Aren't you might have missed it but there was an interesting op Ed in today's Wall Street Journal by former Bank of America executive Sally -- She ran Merrill Lynch she knows a thing or two about individual investors.
In -- speech she claims money market funds the mutual funds which are often seen as a safe place to.
Put money away.
And have access to catch maybe they're not as safe as people think.
And government regulation may not go far enough is this a reason to be concerned here to weigh in -- Matt McCall he's the CEO of -- financial here to help.
Good to see you now -- Here's the worry let me put it cannot -- That a lot of this money is invested in European debt European Bank debt and you know what European banks are doing are not being too impressive.
So people are concerned that you know maybe people might get caught in a European run a bank.
That people would find out that there money market much money is not safe and it's supposed to be safe.
You say don't worry -- I'm not worrying because you think about the money market that in the average investor is a number one.
-- to take a look at if it today if it's at a brokerage account what is brokerage accounts have insurance can't -- think that's gonna cover you up to several 100000 dollars in money market so.
As the average person there's a more to have odd couple 100000 dollars and -- I don't wanna have -- the governor can't ask you don't let the government you know like come on what we will apply for the -- to get my money back for you kidding we just be Smart up front.
-- most of us think about it they give these these are pools of short term bonds -- basically -- -- -- US government could be corporations here in US and abroad 45% of that this summer within European banks.
45 reason for that is because European banks are paying a higher -- so that you can get somewhat of -- yield in your money market fund.
So what what really the only having to disclose -- happens is if there's a run and European banks and then from there these European banks within blow up.
Then the blow up and -- would have some -- the effect here on our money markets and then from there we -- -- -- run at our money markets or break the -- very confusing but the chance happenings there -- -- Do you think -- slam I'm a little more worried and I -- -- -- my other real problem with -- market -- mutual funds with some numbers here showing what returns aren't they are horrible.
Do you make a while -- here here's save your money aside and let me tell you I know so many people who do this they put a ton of money in these in these accounts and these mutual funds.
These may not be exactly the right numbers.
And they forget about it.
And they may not dynamic especially having a hard time now look if you're -- saver you're just trying to set money aside and get a decent return it's not happening.
And it's very tough to find any return out there right now -- -- showing about what fifty basis points point 5% on average for money market fund.
I mean in your taking a little better risks I think that risk rewards probably not worth -- putting in there.
I don't think they're gonna blow up I will agree with you with a little bit of risk you're taking you're getting nothing back for and with inflation -- losing money.
What might be out with inflation you are you losing money so where should I put this the one thing you should do is -- -- US government bonds which is ten year U loading their money for ten years for 2%.
But the great chance that that could be three or 4% and wrote that -- your bonds actually -- -- -- lose some money.
If you go that route I have personally like this in your probably illegal read against US -- it's because of -- municipal bonds missile bonds are gonna be tax free.
And and typically 99 point 9% time they're gonna make their payments and they're -- really good yields compared to US government and -- these money market.
Why -- I think that I would be that 110 of 1% I get caught in some kind of you know and investment that blows up where they don't pay the bondholders.
You know some good Pennsylvania -- skier.
You know and and that would be -- yes.
Holding and holding the NY Pennsylvania because I'm from visiting is that wish I was at me I'm not picking on -- -- Betty just have a Pennsylvania and go bankrupt.
Harrisburg yes thank the capital Pennsylvania -- well I think -- -- you can always worry about something you have a concern and as you're worrying -- money underneath the mattress to go on the backyard.
I -- you look at these money market rates actually not a bad place to keep it on your -- right now so Lisa have a safety you're not making it anyway in my market.
Well you can't save anymore there's no saving in this country that it's I think that's normal.
We have to say we have to say that there's no return.
I want I want I want a little -- all I'm I'm still looking Matt and it's a pleasure to have you want to show your love having you line thanks thanks for being in here.
Are at the.
